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Updated 24 Sep 2020

Fostering team spirit

Strong leadership requires the ability to conduct crucial conversations and get everyone involved.

19 November 2012  Share  0 comments  Print

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Growth strategies aren’t only about the good times. They’re even more important when times are tough. The companies that not only survive a recession but manage to grow stronger because of recession-based decisions are the businesses poised for growth once the market begins to turn.

When Ron McMillan, co-author ofCrucial Conversations, theNew York Timesbestseller and co-founder of the Covey Leadership Centre realised how the recession was going to affect his business, he didn’t pretend everything would be okay. Instead, he had a series of meetings with his board, directors, managers and employees.

“Conversations, even tough ones, are the first step in problem solving. It’s amazing what you can achieve together if you just put everything on the table and discuss their implications,” he says.

The problem was this: Because of a depressed economy, it was estimated that 80% of the Covey Leadership Centre’s clients were going to spend 50% less on training. “Companies were cutting their training budgets, and all we could see were storm clouds on the horizon,” says McMillan.

Understanding the realities

The board did not try and hide what was happening from its employees. It also didn’t just make the decision to retrench staff members. Instead, everyone was called in and given the reality of the situation, and a choice to make.

“We presented the worst case scenario, but made it clear that we did not want to entertain that scenario,” explains McMillan. “If our revenue dropped, we would need to curb expenses. One way of doing this was a 10% reduction in our workforce, bringing our product development budget down to zero and reducing our profit share agreements to zero. At this point our profit sharing model made our consultants some of the highest paid in the industry.”

In the spirit of open conversations however, a second option was then discussed. If the entire staff compliment, which consisted of 90 employees, was willing to accept a 20% cut in salary for the next year, no one would be retrenched.

All on board

“The danger is of course that you might lose some key players, who will always be in high demand,” says McMillan.

“The way we circumvented this was to have in-depth one-on-one conversations with those employees, asking them if this seemed like something they would be willing to do.”

The open and frank conversations created real team spirit. All 90 employees stayed on at a reduced salary, but the decision ensured that the business not only survived the recession, but was in a position to enjoy serious growth a year later, with all players enjoying a larger profit share as a result.

“It all starts with being able to talk to your employees, and understand that growth is the result of team work, not just the business owner.

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